Wednesday, September 28, 2011

The Terrifying 2012 Bear Case Scenario, Morgan Stanley

Investors are worried that corporate profits could fall if the U.S. goes into another recession. Currently, analysts are expecting around $112 per share in S&P 500 earnings, which reflects more than 10% year-over-year growth.However, Morgan Stanley's Adam Parker warns that if earnings decline, they could dive.

Prepare to Profit From the Next Stock Market Crash
Indeed, it's not the economy that has driven the stock market higher. Instead, it's been three other factors:
* First, ultra-low interest rates together with increased leverage have inflated corporate profits.
* Second, modern communications technology has enabled multinationals to profit from low-cost global sourcing.
* And third, money -supply expansion - with the St. Louis Fed's broad money MZM up 262% since 1995 compared to GDP's 105% increase has inflated all asset prices. Most notably housing prices in the middle 2000s, Treasuries and gold today.

We Told You That Weeks Ago
Wall Street heavyweight Goldman Sachs Group Inc. (NYSE: GS) is now predicting that oil prices will soar in the next 12 months, with London-traded Brent crude reaching $130 a barrel and U.S.-traded West Texas Intermediate (WTI) crude reaching $126.50. The fact that oil prices will soar wasn't a surprise to readers of Private Briefing - we made a similar prediction to the charter subscribers of our new premium investment-advisory service six weeks ago. Furthermore, we showed subscribers how to profit.